On August 28, all 8,036.947 tons of reserve cotton offered were sold, marking a 100% clearance rate for yet another session. The average price reached 17,588.27 yuan per ton, up 154.8 yuan from the previous day, with the 3128B equivalent at 18,319.46 yuan. The highest bid was 18,100 yuan and the lowest 17,330 yuan. This price level now exceeds the cost baseline that many mills had previously locked in, implying stronger support for cotton yarn quotes from the raw material side.
Background
Since the start of this round of reserve cotton sales, cumulative offers have totaled 240,683.755 tons, all of which were sold, with an average price of 17,263.96 yuan per ton and a 3128B equivalent of 17,911.18 yuan. Imported cotton averaged 17,392.62 yuan per ton, 414.87 yuan higher than Xinjiang cotton, with an average premium of 1,562.46 yuan versus 1,147.35 yuan for Xinjiang cotton. The persistently higher premium for imported cotton signals sustained demand for high-grade, highly spinnable fiber, even as prices firm.
On the day, imported cotton averaged 17,606.96 yuan per ton (3128B: 18,398.72 yuan) with a premium of 1,410.72 yuan, while Xinjiang cotton averaged 17,525.18 yuan (3128B: 18,051.88 yuan) with a premium of 1,063.88 yuan. The spread narrowed to just 81.78 yuan, suggesting Xinjiang cotton is becoming more cost-competitive. For mills, this opens room to adjust blending ratios in favor of domestic fiber to mitigate imported cost pressure.
Industry Impact
The 100% clearance rate is no coincidence. With mill inventories generally low and new crop supplies still weeks away, reserve cotton remains the only large-scale, predictable source. Companies are bidding not just to replenish stocks but to lock in production costs for the next two to three months. The cumulative average premium of 1,433.72 yuan indicates that bidding enthusiasm has not waned despite higher prices, pushing the overall transaction center upward.
For the downstream yarn market, rising reserve prices will transmit directly to cotton yarn quotes. Mainstream counts such as 32s and 40s have seen tentative increases, but grey fabric mills have limited acceptance, making transmission uneven. This squeezes spinner margins: raw material costs rise while end-order prices face resistance. Mills need to balance inventory cycles against order delivery more carefully.
Regionally, stronger Xinjiang cotton activity benefits local ginners and traders, while mills in Shandong and Henan are watching the imported-Xinjiang spread to optimize blending. In the near term, high clearance will likely persist until the sales program ends, but if downstream orders disappoint, high-cost inventories could become a burden.